USPS Board Rejects Postal Rate Recommendations

The U.S. Postal Service's Board of Governors at its monthly meeting yesterday rejected postal rates and fees recommended last month by the Postal Rate Commission.

The decision is the latest in the two groups' sparring over the size of the postal rate increase implemented in January. The BOG is seeking to overturn the PRC's recommendation to cut the postal service's rate request from a 6 percent average increase to a 4.6 percent increase.

The PRC last month declined to increase the overall contingency fund for the USPS and continued to block the 6 percent increase.

Postage rates implemented in January remain unchanged.

Robert F. Rider, BOG chairman, said in a statement that the "governors found that the rates and fees recommended by the commission do not meet the statutory policy of breakeven and jeopardize the postal service's financial situation during this fiscal year and future years. Therefore, the governors are returning the case for reconsideration, as provided for in the Postal Reorganization Act. We again ask the commission to reconsider this matter as quickly as possible."

Stephen Sharfman, a PRC spokesman, said the agency is looking into the request. If the PRC again refuses to OK the 6 percent rate increase, the BOG has the power to raise the rates unilaterally by a unanimous vote. Insiders said it seems likely that it would do so.

At the meeting in Washington, Postmaster General William Henderson said the USPS was running a $200 million loss through January for the 2001 fiscal year, which began in September.

The dispute between the USPS and the PRC began in December when the BOG allowed under protest the 4.6 percent postage increase recommended by the PRC.

Following that, the USPS claimed that the PRC exceeded its authority when it reduced the amount of new revenue designated for the contingency fund from $1.7 billion to $1 billion.

The PRC in February recommended an increase in bound printed matter rates of 8 percent to 10 percent more than the 17.6 percent average increase that took effect in January.

By law, postal governors can ask the PRC to reconsider its recommendations, vote unanimously to override its recommendations or challenge the PRC's actions in court.